With the continued technological advancements in the fields of communication and travel, the world is becoming “smaller and smaller”, and more and more transactions are remote transactions, i.e. between a product/service provider and a remote purchaser. Examples of such transactions may be the purchase of a product over the Internet, or the purchase of a service over the telephone. In many instances the payments may be made with a credit card, a debit card, a smart card, or any other technology which affords payment of such types. One of the main problems, for both the provider and the purchaser, is to authenticate the identity of the remote purchaser, or alternatively, to validate that the purchaser has the authority to perform the requested transaction.
One of the common present day solutions for the validation of remote identification is for the provider to limit the transaction to those purchasers who specify a valid billing address. Alternatively, other providers will only allow transactions where the shipping address is identical to the billing address.
These methods have serious limitations. In the most innocent situation, the purchase may be a gift to be sent to an address that is different from that of the billing address. In a less innocent situation, the unauthorized purchaser may be aware of the appropriate billing address associated with the selected form of payment.
As a further limitation, in many cases, the allowable billing addresses are limited to those in a specific country. This is mostly due to the inability of the provider to verify foreign addresses. This scenario limits the ability of the provider to service global trade.
Secured electronic payment processing such as that provided by Secured Sockets Layer technology has other limitations. It requires customers to be registered with at least one certificate authority. It requires complex interaction between different certification authorities, which might use different technologies. It is also limited to electronic commerce.
Another known validation approach is for a person representing the service/product provider to phone the home of the credit cardholder, who is presumably the purchaser, and validate the transaction. The cost to the provider for such an action is an obvious limitation. Additionally, even when such a validation method is used, chances are the cardholder/purchaser may be performing the transaction from a location other than his home, and hence, the cardholder may not be found. The functionality of such a solution is limited.